The embattled minority government of Prime Minister Justin Trudeau faces a new challenge with the recent resignation of Deputy Prime Minister and Finance Minister Chrystia Freeland. With the sudden resignation comes questions of whether Trudeau himself might resign in the coming days. With president-elect Donald Trump’s inauguration on the horizon, who governs Canada is likely to set the tone for U.S.-Canada and broader North American relations.
Q1: What is happening in Canada’s politics?
A1: The past few days in Ottawa have been tumultuous as a result of the unexpected resignation of Deputy Prime Minister and Finance Minister Chrystia Freeland on December 16, 2024. The departure of Trudeau’s most important and loyal lieutenant came just hours before she was scheduled to present Canada’s fall Economic Statement to the Parliament of Canada. As it turns out, days earlier, Trudeau had told Freeland he would be replacing her with former Bank of Canada (and Bank of England) governor Mark Carney, but that the request to table the economic statement, which would show that the Liberals blew a CAD 20 billion hole in the budget, against promises of keeping it steady, would remain. Freeland balked, and the popular Carney, who Trudeau has been trying to recruit to turn around his political fortunes, walked away.
In her resignation letter, Freeland cited disagreements with the prime minister and emphasized the need for Canada to maintain fiscal reserves to prepare for a possible tariff war with U.S. president-elect Donald Trump, arguing against expensive political-electoral moves (such as a holiday on the federal sales tax and a CAD 250 check to most Canadians) that could undermine public confidence in the government’s ability to handle the tariff crisis. Freeland’s resignation has heightened political uncertainty in Ottawa and has sparked speculation about Canada’s economic strategy and political stability; the Canadian dollar has fallen to its lowest level since March 2020. On the heels of her resignation came calls from the leaders of all other major Canadian political parties for Trudeau to resign.
This is not the first time Trudeau has faced significant calls to step down. In late October 2024, at a closed-door caucus meeting, Liberal Party members urged him to resign to avoid torpedoing the party’s chances in the next election. For more than a year, the Liberals have trailed the Conservative Party by double digits in polls due to significant policy missteps, including its handling of Canada’s housing crisis, which record-high immigration levels and an insufficient housing supply have exacerbated. The loss of support from the New Democratic Party (NDP) contributed to the government’s tenuous hold on power. The NDP had supported the minority liberal government under what is known as a supply and confidence agreement, where in return for their support, the liberals agreed to pursue some of the NDP’s priorities. But, the NDP pulled out of the agreement in September and has since been supporting the government in parliament on a case-by-case basis. The Liberals’ support in the polls currently sits at about 22 percent, a steep decline from its peak of 55 percent in May 2020.
This atmosphere makes Canada the latest country to likely face a global anti-incumbency wave. In recent elections, virtually every other large democratic country has seen a change of government fueled by deep political dissatisfaction.
Q2: When will happen if Prime Minister Trudeau resigns?
A2: Following the resignation of Freeland and blowback from within the Liberal party, Prime Minister Trudeau said he would “reflect” upon criticisms of his leadership. Parliament went home for the holidays on December 17 and will not reconvene until January 25, 2025, giving Trudeau some breathing space. Should the prime minister decide to resign, the Liberal caucus would name an interim leader from among its members in Parliament who would immediately become the new prime minister, that is, so long as the government isn’t defeated by a no-confidence motion in parliament. The Liberals could choose someone who is not a sitting member of parliament, but that person would have to run in a by-election in what would be a “safe seat” with the incumbent of that riding resigning to make way for an interim leader. However, given the Liberals’ deep unpopularity at the moment, there may be precious few safe seats for such a maneuver, so it is more likely that the party would choose an interim leader from among its current members of parliament.
Selecting a new permanent leader will take some time. It took five months for Trudeau himself to win the leadership race back in 2013. Mark Carney, the former banker (who is not a member of Parliament); Chrystia Freeland; Melanie Joly, the country’s minister of foreign affairs; and long-time Trudeau friend, Dominic LeBlanc, who was promoted to finance minister after Freeland’s resignation, are the front runners to replace the prime minister. Were the government to fall and a snap election called, the campaign period can be no more than 51 days, meaning the unpopular Liberals would likely have to campaign with an interim leader who would not have the mandate of a permanent leader chosen through the normal party mechanism, making their long odds even longer.
Resignation by the prime minister does not necessarily mean that the government would fall and new elections would be held. For that to happen, a no-confidence vote in parliament would be needed. While the Conservative Party under Pierre Poilievre is eager to bring the government down, it does not have sufficient votes to do so on its own. Here, the New Democratic Party (NDP), under Jagmeet Singh, holds the keys. Like other party leaders, Singh called for Trudeau to resign on December 16, but he did not say whether he would call for a no-confidence vote, telling the media that “all options are on the table.” Like the Conservatives, the NDP accuses Trudeau of spending his time trying to prevent his ship from sinking rather than addressing president-elect Trump’s tariff threats, which some describe as an existential threat to the Canadian economy. The NDP is less than 2.5 points behind the liberals and is trying to create enough daylight between their former governing partner in order to jump into second place and become the Official Opposition. While no one likes a winter election in Canada—two have taken place in the last 100 years—the days before a no-confidence motion is approved are getting fewer.
Trudeau also has the option to prorogue Parliament, essentially terminating the parliamentary session until a certain day. This would prevent any no-confidence votes and keep the government afloat, but would most likely be highly unpopular, reducing the Liberals’ chances even further in the next election.
Q3: What is likely to happen when Canada holds elections?
A3: Poilievre’s Conservatives have a massive 21-point lead over the Liberals and will almost certainly form the next government should there be an election. Current polling indicates they would easily win a majority government with an estimated 218 seats in Parliament (172 are needed for a majority in the 338-seat parliament), with the liberals reduced to 50 seats, the Bloc Quebecois surging to 41 seats, and the NDP winning approximately 32 seats. Ranges within polling results could see the Conservatives with an even greater majority, the Liberals gaining or losing more seats, and placing the Bloc and the NDP in a virtual tie for Official Opposition status.
Poilievre has excelled at the performative aspects of politics, with punchy and combative slogans like “Axe the tax” and “Spike the hike” designed, much like president-elect Trump, to appeal to a working class frustrated by inflation, high housing costs, immigration, and other issues. He has created considerable energy and expectations but has been deliberately light on substance. If elected prime minister, what would he do?
Poilievre has said that his economic plan is to “axe the (carbon) tax, build the homes, fix the budget, stop . . . crime” and is “a bottom-up, free-enterprise agenda, not a top-down state capitalism agenda.” He aims to revoke the unpopular carbon tax and seek to implement comprehensive tax reform. As housing prices have skyrocketed, the Conservatives have proposed scrapping the federal sales tax on new housing costing less than CAD 1 million, claiming that this will help lower mortgage costs and speed up homebuilding. On crime, Poilievre has voiced support for tough-on-crime policies, like introducing mandatory minimum penalties for extorsion and auto theft. On health care, the Conservative leader has criticized the Liberal government’s pharma care legislation, which includes prescription drugs in the umbrella of treatments and services covered by national Medicare. Under a Poilievre government, the private health care market would grow, and it is likely more people will find themselves paying out of pocket for a range of medical services. On immigration, Poilievre has said that he would cut the number of people arriving in Canada, given that a surge in international students and low-wage temporary foreign workers has ruined the “multigenerational consensus” that immigration is positive for the country according to him.
Q4: What does this mean for U.S.-Canada relations?
A4: Relations with the United States would likely be better under a more business-friendly Poilievre government, not only because of ideological affinity with president-elect Trump but also because of the low esteem the U.S. president has repeatedly demonstrated towards Prime Minister Trudeau, recently calling him the “governor of the great state of Canada.” However, if Trudeau resigns now, it is highly unlikely that a new government could be constituted by the time Trump takes office on January 20, 2025. This means that Canada will enter the critical first 100 days of a U.S. administration rudderless, with an interim Liberal leader at the head of a highly unpopular government. This scenario bodes ill for Canada’s ability to navigate swirling threats of tariffs from its southern neighbor, while the Trump administration is likely to seize the opportunity to pressure Canada over a host of trade, defense, and border security issues. Over the long term, however, a change of leadership may provide a window to improve U.S.-Canada relations sooner rather than later, even if the immediate consequences prove disruptive. A new government in Canada will benefit from having won a mandate through elections, giving it a stronger hand to play in negotiations with the United States over tariffs and the 2026 USMCA review, and given the ideological alignment under a likely Conservative government, could unlock new areas for cooperation, such as in energy and critical minerals cooperation.
However, a change in leadership is no panacea. The structural features of the U.S.-Canada relationship, namely the U.S. trade deficit with Canada and Canada’s laggard defense spending, are unlikely to be resolved overnight. Both countries will have to continue engagement at all levels to move the relationship in a positive direction. Some areas to focus on, regardless of changes in government in Canada, include border security, where Canada has acknowledged a growing challenge in stemming the flow of criminal activity, including illicit drugs and weapons. Another focal point should be critical minerals, where Canada’s vast resource wealth and expertise in mining and refining can be an asset to the United States as it seeks to de-risk from China. Energy security can also be discussed, especially as U.S. imports of crude oil from Canada reached a record of 4.3 million barrels per day in July 2024 following the expansion of Canada’s Trans Mountain pipeline. Finally, increasing military cooperation and investment, particularly when it comes to North American Aerospace Defense Command modernization and actually bringing defense spending to the 2 percent NATO target, will be essential for Canada to show the United States it is prepared to carry its own weight when it comes to North American security and defense.
Neither the United States nor Canada benefits from frayed relations with one another. The possibility of Prime Minister Trudeau’s resignation raises concerns and opportunities alike, but none of these should overshadow the importance of the broader bilateral relationship and the millions of individuals on both sides of the border who benefit from it.
Christopher Hernandez-Roy is the deputy director and senior fellow of the Americas Program at the Center for Strategic and International Studies in Washington, D.C. Henry Ziemer is an associate fellow with the CSIS Americas Program. Andrea Casique is an intern with the Americas Program at CSIS.
